#nextbillion

Bridge believes that all children possess amazing potential, but not all have the chance to reach it.

... well not quite! We managed to watch his keynote on a big screen outside of the conference.

Whilst Mark Zuckerberg and Facebook are still on a mission to connect the poorest billion people in the world to the internet, he spent his time at MWC praising the telcos for providing the infrastructure to connect the rest of the world.  There's a hot debate about brands like Facebook and Google providing free OTT messaging services and making revenue through ad-services whilst the telcos lose their traditional income from SMS.

Please Note: This post appeared on Nextbillion.net, and is one in a series of articles highlighting innovations for financial inclusion. It was first published on the Ashoka Changemakers blog as part of the G20 Financial Inclusion challenge. Part one of the series can be found here. 

Read the original article HERE

Currently, most of India’s mobile banking users are those who already have formal bank accounts and are of the wealthier segment. More than 1 billion people in India are unbanked — an enormous untapped market.

One of the key policy issues that the Unique Identification Authority of India hopes to address with the envisioned UID is bringing Inclusion with Micropayments". The linked pdf is a working paper released by the Planning Commission and I suggest that the readers skim through it once. It starts off with a brief on the transformation that India has undergone from limited access to open access economy in the past twenty years. The report also gives financial exclusion levels in rural India and the lost economic opportunity that comes attached to it.

Some innovative policy initiatives undertaken to mitigate the problem of financial services in India are - no-frills account, branchless banking in the form of Business Correspondents (I have previously covered BCs here), liberalization of banking and ATM policies and the incorporation of National Payment Corporation of India (NPCI) which provides a national infrastructure for payments and settlements in the country. Technological advancements have been providing a solid base to leverage all the initiatives.

All these policies, however, are not able to match up to the impact that is expected by the administration. One of the main reason for that is the lack of identity documentation among the rural populace which makes it difficult for them to prove their identity to the banks. This bottleneck has limited the leverage that the banking innovations can provide in terms of access to the financial services. Another limitation is the small amount levels that are usually transacted by the population at low income levels, referred commonly as micropayments. This leads to high per transaction costs which inhibits the banking infrastructure development in the rural parts. 

The Unique Identification Number (UID), which identifies individuals uniquely on the basis of demographic information and biometrics will clearly give the means to the individuals to establish their identity to public and private agencies across the country. It provides a renewed approach towards financial inclusion by integrating various reforms addressing the core issue. This technology provides a very effective avenue in creating a payment system that works efficiently even with low amount transactions by stimulating higher volume of transactions. The implementation of UID will accelerate the process of financial inclusion by providing a micropayments platform, streamlining the allocation and delivery of the government benefits and providing an effective way of banking to whom who have been ignored till now.

It directly addresses the following issues which are the main culprits for the low levels of financial access in India today:

KYC (Know Your Customer) Challenges - Banks follow customer identification procedures while opening new accounts to minify the risk of fraud and money laundering. UID with its authentication and KYR (Know Your Resident) standards will not only bring down the KYC costs for the banks but also reduce the documentation the poor are required to produce to open an account.

Limited Accessibility & High Costs to Poor - Indian banks cater to only 5% of the villages. In this scenario, should an individual from a bankless village need to make a transation, he will need to pay the cost of this financial distance in terms of his travel expense and the loss of daily wages. UID's clear authentication will allow the banks to network with local BCs (Business Correspondents) through which customers will be able to make transactions. Technology for electronic transactions can be employed by the banks to remotely authenticate the customers thus reducing average cost per transaction. It will also decrease the customers' dependence on cash by allowing individual transactions with each other as well as with firms outside the village. Multiple local BCs will provide a choice to the customers.

High costs to Banks - UID will mitigate the high customer acquisition costs, high transactions costs and other fixed costs that are faced in bringing financial services to the poor. This can be achieved through high volume low cost approach.

India, one of the fastest growing economies still lacks an effective strategic framework to directly tackle the high poverty levels. According to the World Bank figures, India reduced its poverty from 60% to 42% of population between 1981and 2005. The same time frame shows poverty reduction in China from 84% to 16%. This eminent contrast is brought by improper channelization of government benefits to the households that most deserve these policy benefits. Even though there is a drastic increase in government spending from 10.5% to 20% this fiscal year, the food, fuel and other subsidies need the infrastructure to make sure that they penetrate and target the aimed beneficiaries and to clear identify the Below Poverty Line (BPL) families. The complexity of beneficiary identification for a government policy reaches another extreme in a nation of 1.2 billion. This leads to improper identification of the vulnerable groups who need support. The limited quota of government ration cards, a form of poverty-assistance, entitles households to take advantages of government funded subsidies. But the allocation of these cards is skewed and more often than not leads to their subscription to well-off families. This Wall Street Journal article cites many cases advocating this skewness. 

UID can provide a platform to address this problem by leveraging the crucial parameter in the whole poverty assistance process - Identity. The IDs of the households can have an authentic label making those households worthy of using the food and fuel subsidies. This model circumvents the limited ratio cards problem and provides all the BPL families their due benefits. Although the problem of poverty definition still persists with different frameworks employed by different institutions and countries to define it, but whatever be the final definition, UID project carries a huge scope in providing the appropriate identification measure.

UID project, if implemented in accordance will be the center to a ecosystem comprising of many addressed issues and enforced developmental applications. This project forms a concrete base supporting the infrastructure that directly addresses the needs of the worst 40% or so population of India.

The Collective was born in 2010 when a handful of New York-based social entrepreneurs and nonprofit leaders realized that we were dealing with strikingly similar challenges and that we could all benefit greatly by pooling our resources, knowledge, and experience. As future agents of change we saw that we needed to sharpen our skills, have easy access to information, and collaborate with others who are equally driven to create tangible positive impact.

Photo by PopTech.

I first learned about Heather Fleming, founder and CEO of Catapult Design, almost a year ago when I read one of her blog posts, "The Future of Design: A U.S. Cell Phone Designed by Kenyans?" on one of my favorite blogs, NextBillion.net.

After reading her poignant piece, I was blown away. The thing that resonated with me the most was Heather’s closing statement:

“Soon multinational design teams will be commonplace and developed countries will no longer host the lion's share of design firms. Imagine 90% of the world's designers finally being tapped into and how that will shape and shift everyday objects we use (a US cell phone designed by Kenyans?) and our understanding of social challenges. It's definitely an exciting time to be a designer.”

After reading a few more of Heather's stories on NextBillion, I decided to Google her. I noticed that Heather had an impressive resume of accomplishments, including being a designer, an engineer and an entrepreneur motivated by social inequality. In 2005, she helped found and then led a volunteer group of engineers and designers focused on humanitarian design projects via Engineers Without Borders. In 2008, Heather was named a PopTech Social Innovation Fellow, a program aimed at high-potential young leaders with new approaches for transformational impact. In 2010, she was selected as a World Economic Forum Young Global Leader for her work with Catapult Design.

She previously worked in the Silicon Valley product development consulting world and has six years experience working with multi-disciplinary teams to design, develop and deliver product solutions for a diverse range of companies. Heather is also Adjunct Lecturer at Stanford University teaching “Design for Sustainability” in the Mechanical Engineering department. Heather has a BS in Product Design from Stanford University.

Last year, she presented on "The Human Factor: The Designer’s Approach to Societal Change" atTEDxSoMa. In her powerful presentation about social design, she points out something every designer should keep in mind, the golden rule principle of design: thy shall not design for thyself!

As a designer, environmentalist and social entrepreneur myself, I was ecstatic to learn that Heather was speaking at the 2011 Compostmodern conference. I emailed my dear friend Francisco Noguera, the managing editor of NextBillion, to introduce myself so I could meet up with her at the conference. Unfortunately, that did not happen, but I did score this great interview with the spirited, smart, passionate and very personable Heather Fleming.

Photo by PopTech.

Monika Kerdeman: What’s your story in 100 words?

Heather Fleming: The only info out there that people don't usually know about me is that I am a New Mexican native. My cat's name is Hanz Strudel. I'm an amazing bowler, lover of fast food, and my favorite hobby is walking.

MK: If you could solve one problem in the world through storytelling or design, what would it be?

HF: Probably not a single, big problem. I think I'd focus on the little problems and annoyances I experience on a day-to-day basis. Something measurable that I could see the impact of within my lifetime.

MK: What would you characterize as your biggest professional success?

HF: Hmm...still waiting for that to happen. Talking with other people who want to be in this field, to do the work Catapult does, I sometimes give myself a small pat on the back for quitting my old job and starting Catapult. But I would never advise anyone else to do this, unless you want to be a salesperson, manager and communicate frequently with the IRS.

MK: What are you working on now?

HF: Too many things, but mostly email. Catapult's designers are working on hand carts, mosquito traps, birthing kits and the like for various countries and people around the world. My job is actually not as exciting as people think. The designers get to do the fun stuff. I'm just a professional emailer.

MK: In your current line of work, what have you found to be the hardest services or partnerships to find or develop?

HF: Partnerships with funders is a never-ending challenge. We don't brand ourselves as "consultants," but if you strip it down, that's essentially what we are. No one wants to fund the middle man, it doesn't look good on their reports.

MK: What inspires you?

HF: Going home to the Southwest. It helps me put things into perspective.

MK: Do you have any requests for collaboration for current or future work?

HF: We're always on the hunt for organizations that can enhance the product development process in rural and impoverished markets. There's a need for distributors, marketing agencies, networks of rural entrepreneurs, etc. These folks and organizations can be the hardest to find without actually being in-country.

MK: Who was your role model for what you are doing now in design?

HF: Definitely not a single person. A variety of people have influenced me at different times in my life. When I was a kid, my cousins in Arizona showed me how engineers could help people. A presentation by Martin Fisher in college showed me how design was being applied in poor parts of the world. Cathy Leslie of EWB-USA was someone I admired for being a woman leader of a successful non-profit.

MK: Catapult was recently named one of the 30 best places to work by GOOD. Do you think these types of accolades and media coverage have changed your business? If so, how?

HF: Sure! We haven't had a traditional marketing campaign and rely almost solely on word-of-mouth to find our clients. The only way that works is if people are hearing about us through a variety of sources. We're very grateful for the interest in our work and the media's interest in sharing our story.

MK: As one of the pioneers in your fields, how did you get the idea to design for social good?

HF: Interesting, I don't really consider myself a pioneer. I think there's a misconception that this is a new field simply because lots of people are just now learning about it. But a lot of the terminology and philosophy we're building on today was formalized at least 50 years ago by economists, engineers and designers working together. (Read: "Small is Beautiful" by EE Schumacher.) Prior to Catapult, I was volunteering my time with Engineers Without Borders and working at a product design consultancy. From there, it wasn't too much of a stretch to combine the two.

MK: What do you see as the biggest opportunities in the developing world in terms of improving people’s lives based on sustainable design?

HF: I think some of the challenges we face in the U.S. regarding renewable energy, green product adoption or sustainable business models are less relevant in rural or impoverished communities. That's pretty exciting to me. For example, small-scale renewable energy is notoriously expensive (when compared to the grid) and almost financially infeasible in areas where the electrical grid is present. Whereas, in impoverished nations, the cost of implementing an electrical grid is so high that renewables make more sense. There's also a lot of buzz in the U.S. these past couple months around collaborative consumption (read: Lisa Gansky's "The Mesh" or Roo Rogers' and Rachel Botsmans’ "What's Mine is Yours") and how that will contribute to more sustainable lifestyles. Rural communities in impoverished communities have been living their lives by the principles outlined in these books for decades, not for sustainability's sake but out of necessity. I think that's interesting because it means we can't assume that our consumption patterns resonate in other parts of the world. Consumers in developing countries could (and in many cases will) leapfrog our old school ways of doing business or buying and owning products.

To learn more, follow Heather on Twitter: @heatherfleming